Divided On Nokia

For a while in the past month, I thought Nokia (NYSE:NOK) was really pulling itself together. I was seeing the Nokia Lumia 920 as a true flagship product which, in several areas, matched or surpassed the market leader -- Apple's (NASDAQ:AAPL) iPhone 5.

The Nokia 920

The way I saw it, the Nokia Lumia 920 was clearly ahead of the iPhone 5 in terms of its camera functions, with optical stabilization and better low-light capabilities. Obviously, Nokia's Maps also greatly outshone Apple's, especially in light of the recent "Mapgate." And Nokia even went further and innovated with wireless charging.

At the same time, the Nokia Lumia 920 will come with a distinctive OS, Microsoft's (NASDAQ:MSFT) Windows Phone 8. This will integrate well into the wider Windows 8 ecosystem, thus perhaps synergizing substantial sales into the new OS.

Also relevant is the fact that the Nokia Lumia 920 brought a distinctive design, using a design language that was born with the Lumia 800 last year. This design language was well-received, even if Windows Phone 7's intrinsic limitations made sure the phones using it couldn't be blockbusters.

All this put together means that the Nokia Lumia 920 probably has what it takes to carve a decent slice of the market for itself.

But Then Came the Problems

It's not even about Nokia's huge marketing blunder regarding the 920's optical stabilization feature, which led to a meme around the world ridiculing it, and also led to heads rolling over at Nokia. The main problem here is that Nokia decided to make the Lumia 820 and 920 AT&T (NYSE:T) exclusives. All fine and dandy, even if by doing so Nokia quickly limited how many of those it could sell.

But then Nokia, hungry for sales, did the unthinkable. It conjured up a few other half-baked, half-designed abominations using the Lumia 820's specs just so that it wouldn't lose market presence in the other operators. An example is the Nokia Lumia 822 for Verizon (NYSE:VZ) pictured below:

This is where I think Nokia went wrong. It had a better chance keeping itself to decently designed phones around the design language it built from the Nokia Lumia 800 onward. Its strategy for mid- to high-end phones should not have compromised in this design like it's doing with the Lumia 822. Apple wouldn't compromise itself by launching an ill-designed mid- or high-end offering, and if Nokia wants to compete it can't do that either, as such an abomination kills its image -- and image is necessary to sell at the high end.

Conclusion

Nokia's mission to return from the dead is difficult enough without it shooting itself in the foot. Nokia needs to establish and keep a high-end image so that it can sell its expensive wares in volume again. Keeping such an image requires that Nokia doesn't launch ill-designed "desperado" phones into the market like it's seemingly doing with the Nokia 822.

At the same time, with the Nokia Lumia 920, Nokia is showing that it still has the capability to put out world-leading devices on a level with the best from Apple. Nokia needs to concentrate on that capability and never compromise it the way it did here.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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